Making sense of Atlanta’s new affordable housing rules

One week ago today, a measure meant to keep Atlanta rents relatively affordable—within the grasp of police, firefighters, teachers, and most young professionals, that is—quietly became the law of the land.

Faced with an intown affordability dilemma, Atlanta on Jan. 29 became the first city in Georgia to adopt inclusionary zoning ordinances. The rules apply to forthcoming residential projects near the Beltline or Mercedes-Benz Stadium.

In short, the ordinances require developers to dedicate a specific portion of units to Atlantans who make between 60 and 80 percent of the area’s median income.

To dig a little deeper, and to help understand exactly what this means, a uniquely qualified local expert chimes in below.

Sasan Nematbakhsh, Esq., an attorney and mediator with Nemat Law Firm in Atlanta, specializes in real estate and construction law. The Georgia State University College of Law graduate is also a former Atlanta Beltline Housing Policy and Development Fellow.

Below, Nematbakhsh explains how inclusionary zoning ordinances for the Beltline and Westside will impact Atlanta’s development scene—and how incentives for developing workforce housing might actually allow such projects to get built faster.

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Many parts of the City of Atlanta, especially the Beltline and Westside Overlay Districts, are experiencing or are anticipated to experience residential development and redevelopment on scattered tracts of land. This has resulted in sharp increases in rent and ownership prices, causing real concerns for many residents on the fate of affordability in the remaining finite land.

Courtesy of Sasan Nematbakhsh

The City of Atlanta has responded by amending the zoning code to mandate development of workforce housing, also known as inclusionary zoning.

The goal of this ordinance is to strengthen the fabric of a heathy community and enhance quality of life for all Atlantans by bringing people of diverse ages, races, and incomes into daily interaction. To create a walkable and affordable city in which families, including teachers, police officers, firefighters, service providers, city and county employees, as well as communities who have called Atlanta home for generations, can continue to do so in the future.

So let us begin our analysis with determining what individuals and entities are impacted.

If your development is located within the Beltline Overlay District or the Westside Overlay District, and you plan on introducing to the market a rental multifamily development of 10 or more residential units at one location, this workforce housing ordinance applies to you. (Be mindful that properties that are contiguous at any point, or separated only by a public right of way or another parcel of the applicant, are considered at one location within the interpretation of the ordinance.)

However, there are two exemptions.

North American Properties

First, if you have already submitted a complete application for a building permit or land disturbance permit to the Office of Buildings prior to the effective date of this ordinance, Jan. 29, you are exempt from this mandate.

Secondly, if you were able to successfully obtain a valid building permit or land disturbance permit before the effective date, your project is also exempt from the requirements of this ordinance. Notably, what does not exempt you from this ordinance is if you have applied for or obtained a special administrative permit but have not applied for or obtained a building permit or a land disturbance permit.

So, for non-exempt projects, here is how this ordinance impacts your potential revenue stream:

You are now required to reserve 10 percent or 15 percent of units for households at or below 60 percent or 80 percent of the Area Median Income for Atlanta- Sandy Springs- Marietta Metro Fair Market Rent Area, as published annually by the U.S. Department of Housing and Urban Development.

(Editor’s note: Under the new ordinance, developers can choose between making 10 percent of units available to 60 percent area median income, or 15 percent of units to 80 percent area median income.)

The monthly rent amount for such households shall not exceed 30 percent of their monthly income, not including utilities and mandatory fees. The construction of the affordable workforce housing units shall be substantially similar in construction and appearance to market rate units, the number of bedrooms shall be proportionate to the number of bedrooms in the market rate units and may not be limited to a specific location of development.

The city also allows you to opt out of the construction requirement by paying a one time In-Lieu fee to a trust fund used to develop future affordable units and to preserve existing units.

The amount of this fee depends on what Beltline Subarea your project falls under and is calculated on a per-unit basis, ranging from $133,838 to $186,605.

There is one fee for all the Westside Overlay District.

The city offers various incentives to developers and builders within the designated districts as listed below:

• Density Bonus: 15 percent Additional Floor Area Ratio and transfer development rights for any excess density not used;
• Parking Incentive: minimum parking space requirement reduction for residential developments as well as for the non-residential component of a mixed-use residential project;
• Priority Application Review: special administrative permit application review to jump to the top of staff’s queue and to occur within 21 days, allowing for streamlined project review;
• Major Project Status: The project to be designated as a “Major Project,” allowing developer to discuss potential issues and expectations with representatives from all departments to expedite development process.

A developer or a builder may choose up to three of the abovementioned incentives to offset the future reduction in their net operating incomes.

This ordinance is now part of the zoning code, and compliance is the only viable option for the real estate community. All affordable units must be actively marketed in coordination with the Office of Housing and Community Development and must comply with the zoning ordinance and the LURA (Land Use Restrictive Agreement), so all developers must pay close attention to the details pertaining to ongoing compliance, reporting, and mandated financial disclosures.

It’s also important to emphasize that Historic District Regulations and all other land use guidelines are still in effect for a project that’s impacted with this ordinance.

— By Sasan Nemat, Esq.

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